Afghan frozen assets
| Company type | Frozen sovereign assets |
|---|---|
| Industry | Finance, International relations |
| Founded | 2021 |
| Fate | Frozen by US and international entities |
Area served | Afghanistan |
Key people | Joe Biden (US President involved in decision) |
Afghan frozen assets denote funds that were immobilized in the United States and internationally following the 2021 collapse of Kabul and the overthrow of the Islamic Republic of Afghanistan by the Taliban. These reserves constitute the second-largest country-specific asset freeze enacted by the US, surpassed only by the Iranian frozen assets from 1980.
Background
Prior to the Taliban's seizure of power in 2021, approximately $7 billion of Afghanistan's reserves were held by Da Afghanistan Bank at the Federal Reserve Bank of New York, with an additional $2 billion maintained in European accounts.
History
In the wake of Kabul's capture in August 2021, the Biden administration immobilized these funds amid legal uncertainties regarding access. On 11 February 2022, President Joe Biden revealed intentions to dedicate $3.5 billion toward a trust fund aimed at providing humanitarian assistance in Afghanistan, while retaining another $3.5 billion for potential compensation claims from families affected by the September 11 attacks.
On 26 August 2022, a U.S. federal judge advised rejecting damage claims against Afghanistan’s central bank, emphasizing its "immunity from jurisdiction" and highlighting that granting such damages would implicitly legitimize the Taliban as Afghanistan’s official government.
Aftermath
The freezing of these assets contributed to a severe economic downturn, escalating unemployment rates and widespread food insecurity. Save the Children reported that half of Afghanistan’s population is experiencing critical levels of hunger.
Reactions
Daniel W. Drezner condemned the US decision as "appropriating assets legally owned by another sovereign nation to compensate its own citizens," cautioning that this could establish a precedent for future sovereign asset seizures and amplify concerns over potential "weaponization" of the US dollar.